In an interview to ET CFO, the ICAI President Sh. Debashis Mitra has stated that Audit is a serious business and CA professionals those who can’t meet the expectation gap, should stay away from the audit assignments which carries huge amount of responsibilities, to avoid getting into trouble(s)/ penal actions and also to avoid getting bad name for the Institute.
ICAI President’s comments over chartered accountants staying away from becoming auditors of companies have come in the backdrop of spurt in business and accounting failures and auditors facing increased scrutiny from regulators. Mr Mitra has rather suggested to look at alternative professional avenues, like GST litigation, insolvency, valuation, etc.
Source: ET CFO dt. 28/03/2022
If there is a possibility that Chartered Accountants may not be capable of even conducting audits, i.e. working in their core competence/ domain area, then this statement is an escapist view and ICAI should introspect and check whether they are issuing the practice licenses to the correct candidates only? Otherwise this statement by ICAI President is unwarranted.
What about the flood of CA’s in Market caused by excessive pass percentage over the past 12 to 15 years? Excessive supply leads to crash in Professional fees and consequently lowering of work ethics and professional standards. Drastic reduction of fees leads to Practicing CA’s being unable to hire good employees to conduct a thoroughly professional audit. Some of the small CA’s are themselves even doing ledger scrutiny and analysis, preparing tax audit reports and filing income tax returns. THEN WHO IS ULTIMATELY RESPONSIBLE FOR THIS PROBLEM?
This is totally wrong. Big firms seize huge amount of audit clients, so the new ca don’t get much exposure. Besides this many other professionals recommend their choice of ca, for benefits expressed in other terms. So new ca have no other option but to reduce fees/ audit quality. Recently new bank order says only ca firms are allowed to conduct bank audit, i.e. not not the sole proprietorships. The big firms should be asked to loose their grip so that new ca can work/ deliver better.
Wat I personally think, we should accept that there is gap between the quality of assurance we are expected to deliver and wat we actually deliver. So, instead of playing a blame game, let’s work together to gain the respect and reputation we crave for and which we would get only after delivering services beyond public expectations and that too in their interest. Further I would like to add one more thing, I agree pass % are increased but do we really implement only wat we read in our syllabus or it’s the practical knowledge and training we get during our articleship period is playing a major role in our career. So, better we should focus on giving better training and practical knowledge to our articles rather than just using him/ her as an article “i.e. an object to be used and thrown out after 3 years”.
What is being stated need not be emphasized now, as this has been the norm from 1949. These principles apply from the time the Institute was formed. Unfortunately over the past years, the profession seems to have lost track of their ideals. One can understand the feelings when these words were stated, but then not doing audits is not the answer. A sense of discipline is what is needed and definitely there is erosion in values.
A practicing CA is expected to meet the requirements and should know how to conduct an Audit. The Institute is expected to educate and train them properly to attain the required standard. If they lack, the blame falls squarely on the Institute for the failure to provide them requisite education and expertise.
I do agree that if quality can not be guaranteed then one should stay away from the audits. But at the same time, I would like to ask my institute as well as the government, as to why no voice is raised by ICAI and no action is taken by the government, when the bids are invited for audit work and return filing and bids are accepted at too low level by the government itself. When concurrent audit fees is set at too low level then why the authorities deciding fees are not questioned?
Needs to make strict rules for eligibility of Articles by CA firm. Eliminate dummy artcleship. Put emphasis on industrial training. The learning of ca subjects are exam oriented. The eligibility for foundation exam needs reconsideration.
I think the demand of profession has increased manifold. Let’s not shy away from the fact that merely pointing fingers can’t be a solution. There is no doubt that even after giving our best, we are not getting the vibes from the Govt. They seem to have gone absolutely in negative mode, as far as our profession is concerned. Even business community is not really taking us seriously, but that’s only in case of small and medium clients. The compliances have increased a lot and are we really ready for that? We need to improve our infrastructure and quality people, but that comes at a cost. Most of us are not ready for that. We tend to operate from small set ups at minimum cost, something which can’t be done now. I agree that CAs who have the capability to handle the pressure and have the quality to deliver, should only accept such high profile cases. Is it not a truth that we ourselves are to be blamed quite a lot in the case of bank audits. Something to ponder for all of us.
It’s high time for the highly placed guardians of the profession/ institution to take stringent corrective measures.
In my opinion, AUDIT is not the only vertical with in the space of Accounting Domain. There are other vericals too. Accounting, Taxation, Banking to name a few. All these need lot of indepth knowledge and experience. But what is hindering is the Revenue Stream. Once this loophole is plugged by entire Fraternity coming together , and adhering to same strictly, the credibility of the members and Institute can be regained. However lots of emphasis on communication, Technology, and continuous training – need to be given. Rather blaming all of us need be together very focused. I still remember how one of the top accounting firm was competing with me for business. I was a small fish in a small pond an they were big sharks. Many years before. I moved out of practice to Industry. But we as a fraternity mus stop undercutting each other. This is the root cause of many problems.
Nothing Personal and my personal opinion.